DAUPHIN ISLAND, Ala. -- In September 1998, Hurricane Georges swept up a beachfront house along the Gulf of Mexico and tossed it like a bowling ball into John and Gail Leacy's summer home on the western edge of this barrier island. The Leacys collected thousands of dollars in federal flood insurance and rebuilt.

Last year, Hurricane Ivan slammed their Creole-style three-bedroom cottage with wind and floodwaters. And in late August, a wall of water from Hurricane Katrina severely undercut the house's concrete pad and pilings.

"We're still standing, but we're pretty severely damaged," Gail Leacy said from her year-round home in Mobile, Ala. "We hope we can save her."

Dauphin Island is one of the most vulnerable barrier islands in the nation. Since 1979, it has been struck by six hurricanes and has lost nearly 500 expensive vacation homes and rental properties. Yet owners keep building back, trying to elevate their homes out of harm's way. And the island has received more than $21 million in federal flood payments to help spur redevelopment.

Now, after Katrina, Leacy and hundreds of other Dauphin property owners will join thousands of others in the Gulf states filing claims against their federally backed flood insurance, putting enormous financial strain on the government-run program.

The National Flood Insurance Program was established by Congress in 1968 to cover property owners who build in flood-prone areas, which are considered too great a risk by private insurers. It followed years of devastating floods and political debate over whether the government should step in to offer insurance.

Nearly from its inception, the program has struggled to pay all its claims. It collects $2 billion in annual premiums but has no reserves, heavily subsidizes some of its riskiest customers and relies on the Treasury to bail it out when losses exceed income. Losses this year from Katrina and Hurricane Rita alone could top $10 billion, experts say, forcing the program to borrow billions from taxpayers with no guarantee of repayment.

Many claims will come from properties that flood repeatedly. As coastal development has increased and more storms have hit the area, properties with repeated losses along the Gulf Coast have been making a growing share of the claims against the government-backed program, according to a Washington Post analysis of federal data. Among the tens of thousands of such properties are older buildings in cities such as Houston and New Orleans, and in small outlying towns. Thousands of others are in resort communities such as Dauphin Island. Overall, the five Gulf Coast states account for $6 billion in claims since 1978 -- half of the total nationwide.

Officials at the Federal Emergency Management Agency, which administers the flood program, say they cannot prevent anyone from building in a flood-prone area. They can only set building and elevation rules for property that qualifies for federal insurance. They say those requirements save taxpayers $1 billion a year in disaster costs.

Some researchers, however, question that assertion and say that FEMA's policies feed a vicious circle: They enable a boom in coastal development that leads to increasingly costly flood insurance payments that in turn fuel even more development. The researchers argue that FEMA and Congress ought to make such programs contingent on communities doing everything possible to lessen risks, including pulling back from the shoreline.

"If ever there were a poster child for a barrier island that shouldn't have been developed, it's Dauphin Island," said Orrin H. Pilkey, a Duke University coastal geologist. "But it did, and now we all keep paying for it."

Not Building High Enough

The western end of Dauphin Island, where the Leacy house overlooks the Mississippi Sound, is little more than a sandbar. John Leacy, a retired builder, said that when he erected the house in 1985 there was a 200-foot beachfront on the Gulf side.

A succession of storms between 1979 and today carved away at the beach and properties: 140 homes in Hurricane Frederic in 1979, 41 in Georges in 1998, and now Katrina, by far the most devastating. Three hundred homes were lost, including at least 200 that were lifted off of their pilings and swept away. There were no deaths or serious injuries.

Today, scores of pilings that once held million-dollar vacation homes stand empty on the Gulf Coast. Many that still support houses are bent or undermined. Roofs have collapsed. Walls have been blown out, revealing gutted interiors. Air conditioners and refrigerators dangle precariously from some openings.

"The damage from Katrina was far worse than I think anyone expected," said Brad Cox, a local real estate agent. He was standing next to the collapsed offices of his company, Boardwalk Realty, which specializes in vacation rentals on the western end of the island.

"We lost 37 of our 90 rental properties," Cox said. "Well, 38 if you include the one that burned."

Most of the homes on the west end were built on pilings, a requirement for federal flood insurance, which pays owners up to $250,000 on a house and $100,000 on the contents for each occurrence. The pilings were 13 feet above the water or higher, based on predictions of storm surge from a major hurricane. Mayor Jeff Collier said local officials had exceeded FEMA's requirements, but it was not enough. The surge from Katrina, he said, was at least 15 to 18 feet, topped by six-foot waves.

"It had to be, to wipe those houses off of those pilings," Collier said during a recent tour of the west end. "I think we may have to go back and revisit the elevation thing."

Yet Dauphin Island has never seriously considered retreating from the sea.

Its existence was briefly threatened in 1979, after Frederic toppled the only bridge to the mainland. Federal officials considered whether tax dollars should be used to help rebuild. Facing intense political pressure, they eventually relented and constructed a $32 million span.

Development followed on the west end. Small cinder-block bunkers -- known as "hurricane homes" because owners did not care if they were destroyed -- gave way to five- and six-bedroom vacation homes. After each subsequent hurricane, FEMA or another federal agency contributed to the recovery: hundreds of thousands for road and utility repairs, $750,000 for a temporary wall of sand, $143,000 for hurricane shutters, even a few thousand dollars for a new town sign.

Now the west end is almost entirely investment property and vacation rentals. Tax revenue from those homes pays half of the local government's $2 million annual budget. "These homes represent a good portion of this town's economic vitality," Collier said.

The island is determined to rebuild with federal aid. "Our goal is to make the island whole again," Collier said. "No one from FEMA is telling us that we can't do that."

In the Path of Storm After Storm

The pattern of federal flood payments on Dauphin Island illustrates the growing share going to properties that get hit over and over. Federal data show that 300 buildings with multiple losses account for more than two-thirds of all flood payments the town has ever received -- $21.3 million. Katrina claims could add tens of millions.

Nationally, properties with multiple losses account for about 25 percent of the flood program's losses while representing 2 percent of all insured property. Now that figure could rise.

"Once the dust settles, we're going to see a big increase," said Michael Buckley, a FEMA deputy director.

Last year, the program paid nearly $2 billion to property owners flooded by Ivan and three other hurricanes -- double its historical average. Managers were forced to borrow $300 million from the Treasury to pay claims. The program still owes taxpayers $275 million.

After Katrina, Congress raised the program's borrowing cap by $2 billion, to $3.5 billion. The Congressional Budget Office recently said it could take up to a decade to pay the loans back, assuming no other catastrophic losses. "It's essentially a loss," said David R. Conrad, a senior water resources specialist with the National Wildlife Federation, noting that Congress wrote off $1.2 billion in loans in the 1980s.

Premiums vary by location and size of the home, with premiums in the Gulf Coast states averaging about $400 a year.

John Leacy called it a "myth" that the program covers all the replacement costs and said he has paid thousands of dollars out of pocket for repairs. Still, he added, "to be honest, they probably lost money on me."

One way that FEMA attempts to cut its losses is by purchasing flood-prone properties and leaving the land vacant. But such efforts have met with only scattered success. Funding is limited, and most of the acquisitions have been along inland rivers, not coasts. Gulf-state acquisitions account for just 7 percent of all federal buyouts, records show. And purchases along vulnerable barrier islands such as Dauphin Island are rare.

While FEMA pays most acquisition costs, the purchases are made by state and local officials and are voluntary. One obstacle is the hefty price of waterfront property, which often accounts for a large share of local tax revenue, said Deborah Ingram, a FEMA official who helps to oversee the acquisitions.

Many older, flood-prone properties benefit from artificially low premiums that usually reflect less than half the true risk of flooding. Congress and FEMA have been reluctant to raise rates, fearing that could price out many poorer owners. Recently, Congress passed a bill that would gradually raise premiums for those who refuse federal help to elevate or relocate their houses.

Rep. Earl Blumenauer (D-Ore.), one of the sponsors of the legislation, said "it was a step in the right direction" but "really very modest considering the size of the problem and the need to put the program on sound financial footing."

FEMA's Buckley said: "If we were a private insurance company, we would drop those properties. But we don't have that option."

Larry Larson, executive director of the Association of State Floodplain Managers, said the problem is "our basic national approach" that it is acceptable to develop anywhere on the coast. "It may be time," he said, "for Congress and states to say maybe there are areas of coastal land where we simply shouldn't build."